Normalized Jurik Moving Average

The Normalized Jurik Moving Average indicator provides a statistically normalized oscillator that combines adaptive smoothing with Z-score scaling to identify momentum shifts and trend extremes with minimal lag.

Usage

The Usage section describes how the script can be used to interpret market momentum and identify potential reversal zones. The indicator functions as an oscillator, where the primary signal line fluctuates around a zero level.

• Trend Identification: When the oscillator line is above zero and colored bullishly, it indicates positive momentum. Conversely, readings below zero with bearish coloring indicate negative momentum.
• Signal Markers: The "L" (Long) and "S" (Short) markers appear on the chart when the oscillator crosses the zero line, signaling a validated shift in momentum direction.
• Overbought/Oversold Zones: The indicator features dynamic zones at the +2/-2 and +3/-3 levels. Readings entering or exiting these zones can be used to anticipate trend exhaustion or significant price reversals.
• Bar Coloring: Users can enable bar coloring to synchronize the price action visuals with the oscillator's current state, allowing for a more cohesive view of the market trend.

Details

The Normalized Jurik Moving Average is constructed using a dual-layer calculation system designed to balance responsiveness with noise reduction.

• Jurik Moving Average (JMA): The core calculation utilizes a JMA-based smoothing technique. This algorithm is designed to track price movements closely while filtering out minor fluctuations, resulting in a signal line that reacts faster than standard moving averages.
• Statistical Normalization: To ensure consistent readings across different assets and volatility environments, the JMA output is processed through a Z-Score normalization. This calculates the current JMA value's deviation from its moving average, divided by the standard deviation over a lookback period.
• Z-Score Interpretation: By converting price data into standard deviations, the indicator allows traders to identify "extreme" moves (+/- 2 or 3 standard deviations) that are statistically significant regardless of the asset's nominal price.

Settings

Core Settings

• Price Source: Determines the input data for the calculation (e.g., Close, Open, High, Low).
• Smoothing Period: The lookback period for the JMA calculation. Lower values increase responsiveness, while higher values provide a smoother, more stable trend line.
• Normalization Period: The window used to calculate the mean and standard deviation for the Z-score. This affects how "stretched" the oscillator appears relative to recent history.

Visualization Settings

• Color Price Bars: Toggles whether the candles on the main chart are colored based on the oscillator's momentum.
• Bullish Color: Sets the color for positive oscillator readings and bullish signals.
• Bearish Color: Sets the color for negative oscillator readings and bearish signals.

FAQ

How do I interpret the L and S markers? The L (Long) marker appears when the Normalized JMA crosses above the zero line, while the S (Short) marker appears when it crosses below zero. These represent momentum transitions.

What is the significance of the 2 and 3 levels? These levels represent standard deviations. The +2/-2 levels typically mark the start of overbought/oversold conditions, while +3/-3 represent extreme statistical deviations often associated with climax moves.

How do I get access to the Normalized Jurik Moving Average? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.